QuestionerThe talk of the Buffett Rule is all over newspapers and TV. But I believe your concept of what should happen to taxation of very high earners is different from what is now promulgated as the Buffett Rule. Could you clear us up on this?
WarrenI would say this. It has gotten used in different ways, I think intentionally in some cases, because it was more fun to attack something that I hadn't said than I tried to attack what I had said. Basically, the proposal is that people that make very large incomes pay a rate that is commensurate with what people think is paid by people with those incomes. I mean, I think most people believe when they look at the tax rates and all that, that if you're making 30 or 40 or 50 million dollars a year, that you're probably paying tax rates in the 30 percent area at least. many people are, but the figures are such that if you look at the most recent year and you aggregate both payroll and income taxes because they both go to the federal government on your behalf, if you take the 400 largest incomes in the United States, they average $270 million each, that's per person, 270 million each, 131 of those 400 paid tax rates that were below 15 percent. Now, counting payroll taxes too. In other words, they were paying it less than what the standard payroll tax was up until we've had this give back here recently, but payroll tax was 15.3 percent for most the last decade. So under the Buffett rule, we would have a minimum tax only for these very, very high earners that essentially would restore their rate to what it used to be. Back in 1992, when the average income of the top 400 was only $45 million, there were only 16 out of the 400 that were at 15 percent or below. But now there's 131. There's still plenty of them that are paying in the 30s. I wouldn't touch them. But I would say that when we're asking for shared sacrifice from the American public, when we're telling people that we formerly told we're given promises on Social Security and Medicare and various things, and we're telling them we're sorry, but we kind of overpromised and we're going to have to back a little, I would at least make sure that the people with these huge incomes get taxed at a rate that is commensurate with the way they used to be taxed not that long ago and probably and is commensurate also with the way that two-thirds of the people in that area get taxed at higher rates.
[2:57]
WarrenMade the calculation four different times, three different times, 2004, 2006, and 2010. And in all three of of those years, when my income was anywhere from 25 to 65 or so million, I came in with the lowest tax rate in our office, and we had maybe 15 to 22 or so people in the office at different times during that. And everybody in the office was surprised. They were all in the 30s, and I was several times, you know, in this area of 17 percent, and that's because the tax law has gotten moved over the years in a way to favor people that make huge amounts of money. And like I say, you know, my cleaning lady, and instead, I've been asked to explain, I kept talking about my cleaning lady. Well, my wife wants it very clear. She doesn't have a cleaning lady. This is a cleaning lady at the office, Mary, that I, my wife has gotten very, she does not have a cook, she does not have a cleaning lady, and she got a little tired of me, implying that she had one. So it's my cleaning lady at the office has been paying. $15.3% on Social Security taxes at the same time that an appreciable number of people making hundreds of millions of dollars a year are paying less than 10%. I think it's time to take a look at that.